Offshore wind gains strength with federal tax credit extension

State approves contract for studies off Ocean City coast

Gov. Martin O’Malley’s third try for legislation to incentivize offshore wind energy development could be more viable, observers said, as federal action this week extended a tax credit for wind developers.

The 11th-hour fiscal cliff deal in Washington, D.C., extended a tax credit for developers of wind energy that was set to expire, a consequence that advocates said could have crippled the industry.

“[The tax credit] does make offshore wind a much easier sell,” said Nathan E. Hultman, professor of energy policy at the University of Maryland, College Park. “Governor O’Malley would have had a hard time getting a good outcome without it.”

The credit, now extended through the end of 2013, gives wind energy developers 2.2 cents for every kilowatt hour of power produced during the first 10 years of a project’s operation.

“This tells the legislature in Annapolis that the leadership in D.C. wants to move forward with wind power,” said Tommy Landers, director of Environment Maryland. “This can only help offshore wind in Maryland.”

O’Malley’s bill, which has twice failed to make it out of the General Assembly, calls for a wind farm off the coast of Ocean City, with the potential to produce 1,000 megawatts of electricity. As the bill was written last year, the project would add $1.50 to each residential customer’s monthly bill and tack on a 2 percent fee to large commercial customers.

The O’Malley administration planned to reintroduce the legislation regardless of whether the tax credit expired or was renewed.

O’Malley (D) spokesmen did not return calls for comment by deadline.

“Maryland would have to be on the very top of the list for places to develop wind energy,” Hultman said. “We have a good wind resource, and there’s strong overall political support, though not perfect. The ingredients are all there for a successful offshore wind project.”

Preparations for the eventual wind project continued at the state level this week, as the state’s Board of Public Works approved a $3.3 million survey of the area off the coast of Ocean City.

All the data from the high-resolution, geophysical survey will be made public, and the information is expected to attract developers for the wind project, said Abigail Hopper, acting director of the Maryland Energy Administration. Hopper told the board that there was a bit of a “chicken and egg” problem when it came to offshore wind projects, because developers might not want to invest in this sort of research without some certainty that the project is viable.

“We think this will balance out some of that risk,” Hopper said, adding that the overall consumer cost of offshore wind power may even go down as a result.

The survey will be financed out of the $30 million Offshore Wind Development Fund created as part of the merger between Exelon Corp. and Constellation Energy last year. Florida-based Coastal Planning and Engineering will conduct the survey, which will examine an 800,000-acre area that begins about 10 miles off the coast of Ocean City.